May 2005

Protecting Pharmaceuticals Patents

Strong patent protection for pharmaceuticals drives medical progress by providing economic incentives for innovation. Patents provide the patent owner with the legal means to prevent others from making, using, or selling the new invention for a limited period of time, subject to a number of exceptions. Patents only gives an inventor the right to prevent others from using the patented invention. A patent says nothing about whether the product is safe for consumers and whether it can be supplied. Patented pharmaceuticals still have to go through rigorous testing and approval before they can be put on the market.

High Cost of Drug Development

The underlying reason why pharmaceutical progress is dependent on intellectual property protection is the high cost of drug development. Although a pharmaceutical invention costs a great deal to discover and develop it can be copied or reverse-engineered very inexpensively, at a small fraction of the innovator’s research and development costs. Without strong patent protection, pharmaceutical companies could not attract the investment needed to conduct this expensive, high-risk research.

American Pharmaceutical Policy

American pharmaceutical policy has increasingly favored the interests of the patent holder. The United States has labored to discourage foreign governments from infringing pharmaceutical patents and buying unauthorized generics from foreign countries. When necessary, the United States has used trade barriers and various other types of political pressure to keep non-compliant governments in line.

25-Year Patent Protection

The prior 15-year patent regimes were replaced with 20-year product patents in the early 1990s. The 20-year protection can be increased by up to five additional years through a Supplementary Protection Certificate (SPC). SPCs were introduced in 1992 to compensate originator companies for the time and cost of developing registration data. In addition to the 25-year protection, further patents for varying periods are regularly granted to pharmaceutical companies for new uses, indications, and dosages as well as changes in formulation, color, or markings.

Strategic Patenting

Patents do not protect medicines; they protect inventions. The invention may relate to a product, a process, a medical indication, or a combination of products. As a consequence, a single medicine can be protected by a large number of separate patents, each relating to a different invention. Pharmaceutical originators may practice strategic patenting by creating a barrier of entry for competitors by filing several patent applications on many different related items. As many patents as possible are sought during the development and marketing cycle, and they are extended for new uses of established products.

Risk of Infringement

The complex science and the extent of coverage of pharmaceutical patents introduces considerable risk of infringement into product development. The business risk of infringement arises in any drug or medical device development. For generics, it arises particularly because a generic medicine is defined as being identical to a branded drug in terms of active principle, and having the same pharmaceutical form, safety level, and therapeutic effect.

Trade Related Agreement on Intellectual Property Rights

The World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) attempts to strike a balance between the long term social objective of providing incentives for future inventions and creation and the short term objective of allowing people to use existing inventions and creations. The TRIPS Agreement is an agreement between WTO Member States. It requires WTO Member States to enact or modify their own patent legislation to regulate the granting and enforcement of patents in accordance with some minimum international rules that it defines. The agreement covers a wide range of subjects, including patents for pharmaceuticals. If a government needs or wants to exploit a patented invention, it must ask the patent holder for authorization and offer “reasonable compensation” for the privilege.

WTO members have to provide patent protection for any invention, whether a product or a process, while allowing certain exceptions. Patent protection has to last at least 20 years from the date the patent application was filed. Members cannot discriminate between different fields of technology in their patent regimes. Nor can they discriminate between the place of invention and whether products are imported or locally produced. To qualify for a patent, an invention has to be new, nonobvious, and useful. Details of the invention have to be described in the application and therefore have to be made public. Member governments have to require the patent holder to disclose specifications of the patented product or process and they may require the patent holder to reveal the best method for carrying it out.

Governments can refuse to grant patents in the following three areas that may relate to public health:

1. inventions whose commercial exploitation needs to be prevented to protect human, animal or plant life or health

2. diagnostic, therapeutic and surgical methods for treating humans or animals

3. certain plant and animal inventions

Legislative Changes

There have been many legislative changes that affect the biotechnology and pharmaceutical industries, including the following:

  • Providing for extension of the patent term to compensate for delays in securing marketing authority from the U.S. Food and Drug Administration (FDA) to sell new drugs for humans and to make it an act of infringement to apply to the FDA for marketing approval of a patented drug to be effective before the expiration of the patent and to remove from the definition of patent infringement acts relating to the collection of data for use in submissions to the FDA for marketing approval of a drug etc.
  • Extension of right to prove prior invention to acts carried out in WTO countries;
  • Removal of remedies for infringement of patents for surgical processes; and
  • The Intellectual Property Omnibus Reform Act of 1999, which provides for early publication of patent applications in most cases, prior user rights for users of later-patented business methods, extension of the terms of patents that would otherwise have terms of less than 17 years notwithstanding the applicant’s diligent attempts to secure early allowance, and an expanded role for third parties in reexamination if they so choose.

Subject Matter of Patent Available For Public Use at End of Patent Term

In keeping with the patent bargain, the subject matter of each patent must become available for public use at the end of the patent term, which according to TRIPS is now 20 years from the filing date of the patent application. If a later patent application tries to re-monopolize the invention as described in an earlier patent, it is to be rejected.

No International Patents

There is no such thing as an international or global patent. When a company is said to have patented a medicine worldwide, it really means that it has a collection of different patents, one for each country or region of interest to it.

Using Patents to Protect Ornamental Objects

A design patent protects the ornamental features of a manufactured article. One of the requirements that an ornamental design must meet in order to qualify for a design patent, is that it must be original to the inventor or inventors that are seeking protection. The design patent statute is found in Title 35 of the United States Code. The first part of Section 171 imposes four requirements for design patentability: novelty, originality, ornamentality, subject matter that is an article of manufacture. The originality requirement excludes from patentability any simulation of known objects, persons or naturally occurring forms. The originality requirement also bars issuance of a design patent for a design derived from any source or person other than the individuals named as inventors.

Protection of the True Inventor

The originality requirement protects the interest of the true inventor and the general public. The requirement bars a patent even if the true inventor does not complain or if the true inventor is not known. Only a true and original inventor may obtain a patent. This requirement of originality bars issuance of a patent for a conception derived from any source or person other than the person or persons named as the inventorship entity. Originality serves to limit patent monopolies to those who actually expend inventive effort in a successful fashion. It also serves to reinforce other substantive requirements of patentability.

Joint and Sole Inventorship

The concepts of sole inventorship and joint inventorship are critical elements of originality. Sole inventorship occurs when one person conceives the solution to the problem, the means to the desired end, which constitutes the subject matter of the invention. Joint inventorship occurs when more than one person contributes to the conception of the solution. It is frequently difficult to determine who has in fact contributed to the conception of a given invention because the contribution must consist of more than suggesting a desired result or following the instructions of another. The originality requirement operates against both nonjoinder, which is the failure to name a joint inventor, and misjoinder, which is erroneously naming a joint inventor. However, where nonjoinder or misjoinder occurs because of error without deceptive intention, a patent or application may be corrected to reflect the proper inventorship entity without loss of rights.

Definition of a Joint Invention

Generally, a joint invention occurs when two or more persons, collaborating together, each contribute to the conception of the solution to a problem which constitutes the invention. A party does not become an inventor either by suggesting a desired end or result, with no suggestion of means, or by merely following the instructions of the person or persons who conceive the solution.

General Knowledge and Suggestions

An inventor may obtain information and suggestions of a general nature from other persons without thereby impairing the originality of the later invention or making the person providing such information a joint inventor.

Inventorship and Originality

In determining inventorship and originality, the focus is primarily upon who conceived the physical structure with new products or the operative steps with new processes that solves the problem at hand, but aspects other than structure may be of importance in determining patentability. The theory or explanation as to why a product or process works to achieve its aim is generally not viewed as part of the act of inventing. Hence, it would seem to follow that one whose sole contribution is discovery of such a theory or explanation is not a joint inventor.

Applicant and Assignee

Generally, the proper inventorship entity must actually file the application even though the underlying ownership rights in the application and any patent to be issued thereon have already been assigned to another. In certain circumstances, persons are allowed to make application on behalf of the inventor. In requiring application by the inventor, rather than the assignee, United States practice is contrary to that of most other countries.

Trademark Protection against Consumer Confusion

Prevention of consumer confusion is the underlying rational for allowing companies to protect their brand names and company goodwill. However, Trademark law seeks to proactively prevent consumer confusion, and thus it does not require proof of actual consumer confusion in order for infringement of another company’s trademark to occur. All that is necessary is that the trademark owner prove that a hypothetical, “reasonably prudent” consumer would likely be confused by the use of the same or a similar trademark on potentially competing products. The hypothetical purchaser is not expected to make detailed, side-by-side comparisons or to have perfect recall.

Infringement Includes Consumer Confusion of any Kind

Infringement is not limited to confusion of consumers as to source, but includes confusion of any kind with respect to consumers or potential consumers. Courts have even found a likelihood of confusion to exist where the public at large could be confused, even though the actual purchasers themselves were not confused.


Factors Used to Determine Likelihood of Confusion

In determining likelihood of confusion, courts evaluate several factors. No one factor is determinative in and of itself, and how important one factor is over another is case specific. The factors are as follows: Whether or not the goods or services using the same mark compete with one another. Marks that are used on similar or related goods or services are more likely to confuse consumers as to the source of those goods or services. Even where the plaintiff’s products are not exactly similar, the court may in some cases consider how likely the plaintiff is in the future to sell similar products. Whether or not the goods or services are so closely related that they are being marketed through the same stores or channels of distribution. Whether or not the alleged infringer intended to trick consumers in order to “cash in” on the plaintiff’s business good will. Whether the marks are similar in appearance, phonetic sound, or meaning. How careful the consumer is likely to be prior to purchasing. The more sophisticated the consumer or the more expensive the product,the more discriminating the consumer is expected to be and the less likely confusion will be attributed to them. Whether or not the companies are accessing overlapping customer bases. If the companies both sell mainly to the same groups, there is more likely to be consumer confusion. The legal strength of each of the marks. The greater the public recognition of a mark as a source identifier, the more likely that similar uses will be confusing. Whether there has been any actual confusion. The fact that there has been actual confusion is not conclusive evidence of likelihood of confusion, but it must be weighed together with the other factors.

Control Over Quality of Products

Trademark law frequently refers to the confusion of consumers or the probable confusion of consumers. The reason for this is that trademark law is not as much about protecting business interests as it is about protecting consumers. By providing a business with the incentive of increased profits by the grant of exclusive rights in a mark and imposing a duty upon that owner to stop others from using that same mark on competing products, trademark law gives consumers some amount of control over the quality of products they buy. If one brand satisfied the customer more than another, that customer could easily find the brand they liked without having to read ingredient labels or scrutinize packaging, materials, and workmanship. This saves the consumer time and allows him or her to make informed purchase decisions. For this reason, the standard of when a trademark right is being infringed has entirely to do with whether or not a consumer is going to be confused, and thus deprived of making informed purchasing decisions.


Oblication to Police Trademark

It is because of the focus on consumer protection that businesses are not allowed to ignore infringing uses of their mark. Companies who tolerate infringing uses of their mark risk losing all their rights in the mark if a third-party challenger claims the company abandoned the mark by not enforcing it.

Trademark Protection under State Common laws

Trademark rights arise in the United States from the actual use of the mark. Thus, if a product is sold under a brand name, common law trademark rights have been created. This is especially true once consumers view the brand name as an indicator the product’s source. Common law marks are marks protected because they have been adopted and used, and the public recognizes the products or services identified by the mark as coming from a particular source. The term “common law” indicates that the trademark rights that are developed through use are not governed by statute. Instead, common law trademark rights have been developed under a judicially created scheme of rights governed by state law.

Coexistence of Federal, State, and Common Law Trademark Rights

Federal trademark law coexists with state and common-law trademark rights. Originally, state common law provided the main source of protection for trademarks. However, in the late 1800s, the U.S. Congress enacted the first federal trademark law. Since then, federal trademark law has consistently expanded, taking over much of the ground initially covered by state common law.

Federal trademark law is embodied in the Lanham Act, which was enacted in 1946 and most recently amended in 1996. The Lanham Act is based upon the Commerce Clause of the Constitution. Congress enacted the Lanham Act under its Constitutional grant of authority to regulate interstate and foreign commerce. Therefore, to obtain a federal trademark registration, in most cases the owner of a mark must demonstrate that the mark is used in a type of commerce that may be regulated by Congress.

The Trademark Law Reform Act of 1988 amended the Lanham Act to establish trademark rights, which vest upon registration following use of the mark in commerce, as of the filing date of a trademark application indicating a bona fide intent to use the mark in commerce. For trademarks used in commerce, federal trademark protection is available under the Lanham Act.

Many states have trademark registration statutes that resemble the Lanham Act, and all states protect unregistered trademarks under the common law of trademarks. A trademark registered under the Lanham Act has nationwide protection. Today federal law provides the main and the most extensive source of trademark protection, although state common law actions are still available.

State and Federal Registration Systems

Registration at either the federal or state level is not necessary to create or maintain ownership rights in a mark. State registration systems exist throughout the country to allow the owners of common law marks to register them if they are used within a particular state. As commerce between the various states evolved, the federal system of registration emerged to provide protection for marks in interstate commerce. Federal protection may be available for the name of a product and/or service, a logo, or any other mark that identifies the source of a product or service. Common law and state registration rights are enhanced by the benefits associated with federal registration.

Federal registration, a system created by federal statute, is not required to establish common law rights in a mark, nor is it required to begin use of a mark. However, federal registration, if available, is almost always recommended and gives a trademark owner substantial additional rights not available under common law. Federal registration rights can be renewed and can last forever.

Limited to Geographic Area of Mark

Common law trademark rights are limited to the geographic area in which the mark is used. It can be difficult to discover whether anyone has trademark rights in a particular mark because no registration is required in order to establish common law rights to a trademark.


First-in-Time Rule

The general rule is often referred to as “first-in-time,” which states that the first person or entity to use a trademark in commerce receives common law protection for the use of that trademark. Thus, this “first person” can prevent others from using that same trademark even if this “first person” never registered the mark. Therefore, conducting a comprehensive trademark search is vital in helping make the determination of whether to proceed forward with a trademark registration even if the mark is not registered with the United States Patent and Trademark Office (USPTO) by another person or company. The first business to use a trademark generally obtains certain common law rights to it, whether or not it is registered. The owners of unregistered trademarks may indicate their claim to common law rights to the trademark by using “TM” with it. Priority of trademark rights between owners of confusingly similar marks, regardless of whether the marks are federally registered, is based upon first use of the mark.

Common Law Rights Arise from Actual Use

Federal registration is not required to establish rights in a trademark. Common law rights arise from actual use of a mark. Generally, the first to either use a mark in commerce or file an intent to use application with the USPTO has the ultimate right to use and registration.

Common Law Search

A common law search involves searching records other than the federal register and pending application records. It may involve checking phone directories, yellow pages, industrial directories, state trademark registers, databases, and other sources to determine whether a given trademark has been used already. A common law trademark search is generally done after searching the USPTO database of registered trademarks. In order to register a trademark, the federal trademark application requires a signed declaration from the applicant that states, “to the best of his/her knowledge no other person, firm, corporation, or association has the right to use the above identified mark.”

Protecting Proprietary Information with Trade Secrets

One way to protect proprietary information is as a trade secret. However, in order to benefit from any laws which protect such information, it is critical to provide adequate measures to safeguard the trade secrets. In order for a trade secret litigant to secure court assistance in any jurisdiction so that its rights may be enforced, there is a fundamental requirement that the litigant must prove that it exercised reasonable safeguards to protect secrecy.

Benefits from a Program to Safeguard Trade Secrets

Aside from enhancing a presentation in court, significant benefits may be gained from a thoughtfully conceived and implemented program to safeguard against the disclosure of trade secrets. Programs to safeguard trade secrets should heighten employee awareness of a company’s interest in protecting certain information, which may discourage or thwart attempted misappropriation. An institutionalized program may also discourage new employees from introducing unwanted trade secrets from a former employer.

Placing Employees on Notice

Although it is not necessary to use written agreements to prevent use or disclosure of an enterprise’s trade secrets by its employees, because employees are under an implied duty not to use or disclose trade secrets of the employer, it is elemental that one of the best opportunities to acquaint employees with an enterprise’s claim to trade secrets is through the hiring and employment agreement process. There are many ways to approach the hiring process including using employment agreements to restrict unauthorized use and disclosure. A company should have a well-developed set of rules and guidelines designed to negate disclosure of its trade secrets.

Principal Contractual Techniques

A wide variety of contracting techniques can be used to protect an enterprise’s trade secrets. The most common are contractual provisions whereby the employee promises not to use or disclose the trade secrets of the enterprise.

There are two ways to treat the issue. One is a simple agreement by which the employee recognizes that, as a consequence of his or her employment, he or she will have access to the employer’s trade secrets, that they are valuable and provide to the employer a competitive edge, and that the employee will not use or disclose the trade secrets of the employer either during or after employment. Such a provision is typically in an agreement that also addresses assignment of inventions and other matters. Another and more comprehensive approach imposes restrictions on post-employment competitive activity for a reasonable period of time, within a reasonable territory and a defined scope of activity.

Safeguarding Trade Secrets with New Hires

A prospective new hire could be asked whether or not the employee is subject to restrictions, such as a restrictive covenant with the former employer, on entering into the activity being offered. The prospective new hire could also be asked whether or not the proposed activity with a new employer places a former employer’s trade secrets in jeopardy.

Safeguarding Trade Secrets with Prospective Employee Bound to Former Employer

Restrictive covenants may be used with employees to protect the company’s legitimate interests, a principal one being an interest in protecting its trade secrets. Many times an individual that one wishes to hire is so bound.

Required Notice of Subsequent Place of Employment

One technique to keep in mind in any form of agreement is a requirement that, when the employee leaves, he or she will be required to advise the first employer of the identity of the next employer, that employer’s address and telephone number, and the proposed activity that the employee will be involved in. Where it is a condition of employment, it should be routinely mentioned to the employee at the time of employment and at the termination interview.

Means of Identifying Trade Secrets

A way of putting employees on notice of trade secret matter is to have a routinized, periodic system in place to do so. Supervisors can be charged with the task of periodically identifying aspects of the company’s information that are regarded as of great competitive value. Additionally, articles may be placed in company internal publications stating the importance of confidentiality and the competitive edge that the company’s trade secrets afford to it.

Securing Documented Information

In addition to the precautions of limiting employee access on a need-to-know basis, locking doors to individual offices where trade secrets are maintained, using locked file cabinets or storage rooms for confidential material, and providing appropriate treatment of trade secrets are also means of securing trade secrets.